September 14, 2015
By Alex Keown, BioSpace.com Breaking News Staff
WATERTOWN, Mass. – Craig Thompson, chief operating officer of Tetraphase Pharmaceuticals , made $300,000 on a stock sale just hours before the company announced a failure of its Phase III antibiotic eravacycline, the Street reported this morning.
According to a filing with the U.S. Securities and Exchange, and as reported by The Street, Thompson exercised 10,000 company stock options at $14.45 and then sold them for $44.08, netting a profit of approximately $300,000. The sale came just hours before the company announced eravacycline failed to meet its Phase III endpoints of statistical non-inferiority compared to levofloxacin. Eeravacycline, an intravenous treatment, is being developed to treat life-threatening multidrug-resistant (MDR) infections.
Following the Sept. 9 announcement of the trial’s failure, company stock plummeted approximately 80 percent, crashing from its Sept. 8 closing price of $44.78 per share to $9.59 per share in afterhours trading. The drop eliminated $1.3 billion in Tetraphase’s market value. The is currently trading at $8.94 per share.
The Street noted that Thompson did not violate any laws with his sale because it was conducted under a 10b5-1 trading plan. The 10b5-1 plans “allow corporate executives and other insiders to schedule sales of company stock in advance, thereby insulating themselves from the risk of insider trading,” The Street said. The publication noted that while it was legal, the timing of the stock sale raises questions about ethics because the company was in possession of the clinical trial data prior to the stock sale.
“The eravacycline study results were material, stock-moving information known to executives inside the company days before the information was released to the public. Yet Tetraphase still maintained an open trading window for its executives, through which Thompson exercised options and sold stock,” The Street said in its report.
Eravacycline was being studied as an IV to oral transition therapy for the treatment of complicated urinary tract infections. In the trial, patients received a dose of eravacycline intravenously or a dose of levofloxacin intravenously for three days, and then if eligible, transitioned to oral therapy for seven days. After the study, eravacycline did not meet the standard set by the U.S. Food and Drug Administration (FDA) or the European Medicines Agency, the company said.
“We are disappointed that the IGNITE2 trial did not achieve its primary endpoint. We plan to further analyze the data and provide an update after we have discussed the data and our plans for a path forward with the regulatory agencies,” Guy Macdonald, president and chief executive officer of Tetraphase, said in a statement after the company announced the trial’s failure. “We previously announced positive data from the IGNITE1 phase III clinical trial of eravacycline administered intravenously in complicated intra-abdominal infections which did meet its primary endpoint, demonstrating high cure rates in prevalent Gram-negative pathogens and a favorable safety profile.”
